Unemployment

Unemployment rates continued to rise across all sectors in August. Rates nationwide, in California and Napa County each rose 0.3 percentage points August over July. Always looking for the silver lining - the good news is that Napa County continues to be (of the 58 counties in California) the third best county - i.e. the third lowest unemployment rate in the state (with Marin and Santa Barbara slightly lower).

Nationally, unemployment in August was 9.7%, with California at 12.2% and Napa County at 9.1%. This rise is expected at the end of most recessions.

Listening to our customers, reports continue to show that the bleeding has stopped. Though we are not out of the woods, "sales-wise" many businesses are not continuing to drop month over month. Yes, sales are not where they were a year ago - but are better than 6 months ago and last month. My informal survey includes many restaurants, hotels, and retailers. We are also seeing the turnaround and confidence in that our bank deposits are rising - a positive sign.

So times will continue to be tough through year-end, and we may continue to have a bumping recovery - but we can now say that we see the light at the end of the tunnel.

Inside the Beltway

With a group of bankers from California, I visited our legislators in Washington, D.C. last week - bankers on the Hill so to speak. We met with the Department of Treasury, the Comptroller of the Currency, Chair of the FDIC, and a number of senators and congressmen. This was an opportunity to learn how they were dealing with the financial crisis, and for us to give our input on changes we felt necessary.

Relevant to the economy - though statistically the recession may be at (or near) the end, we expect a few serious bumps in the recovery. As real estate loan rates reset - the adjusted loans will be tough on the consumer. And commercial real estate is clearly not on solid footing. Also, unemployment will continue to rise at least through year-end - causing further issues with the actual consumer recovery. (Watch for the state and local unemployment numbers being published this coming Friday.)

The financial industry also still has a way to go to return to some form of stability. We need to have real solutions to the issues before us. The "too-big-to-fail" notion with large financial institutions is a fallacy. If they need to fail - then so be it. On the other hand as large institutions take on significant risk - they should also reserve more capital and be under tighter scrutiny. We need to have a better handle on the management of all financial institutions - i.e. their regulatory oversight. We saw great debate between the various regulators as to that solution - very territorial. As with the members of Congress, we need to get past this territorial squabbling - and come up with real solutions. That was my message. This is not a time for a dance - but time for serious action.

While I was in Washington, I was also fortunate to be present in the Gallery of the House of Representatives for the President's speech on health care before the Joint Session of Congress. A fabulous experience - but also a show of the degree of partisanship on both sides of the aisle. If we are to achieve solutions to any of the issues on the congressional plate - then again we need to have solution driven action, not political infighting.